Supply Chain News / Economic Development

Correction for Manufacturing

Sales/manufacturing mismatch couldn't last, says IHS Global

The recently released Institute of Supply Management’s (ISM) Purchasing Managers’ Manufacturing Index indicated a softer number of 51.3 in January after closing 2013 at 56.5. This is still growth, though tepid growth, commented Michael Montgomery, U.S. economist, IHS Global Insight.

Montgomery noted that, while the fourth quarter manufacturing index averaged 56.7 in the fourth quarter, production and new orders each averaged more than 60 points (a number over 50 indicates growth). Each of the indexes slipped back to a level closer to 50. For January, orders registered 51.2 and production 54.8.

“The ultimate fate of growth in manufacturing is powered by final sales, either to consumers, foreigners, government, or business investment,” said Montgomery.

“The fourth quarter spurt in manufacturing production was a catch up for a somewhat weaker third quarter in manufacturing, but the growth rate of fourth-quarter manufacturing was nearly twice as fast as final sales gains. The caliber of a mismatch could not last, and did not.”

Exports remained “solid” at 54.5, according to Montgomery, but “just less solid than a few months ago.”

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